# Redbox SPAC Financial Model

Redbox Automated Retail merging with Seaport Global Acquisition Corp. (SPAC: SGAM) to go public and fund digital transformation from DVD kiosk operator to multi-product digital entertainment platform.

- Canonical: https://finamodel.com/startups/redbox-spac
- Excel download: https://finamodel.com/startup-models/redbox-spac.xlsx
- Category: Media/Gaming
- Model type: SPAC / De-SPAC
- Funding round: SPAC
- Funding: $693M
- Founded: 2021
- Geography: United States (40K kiosks nationally, 90% of Americans within 5-minute drive). [DECK, slide 8]
- Customer: B2C

## About the company

Redbox combines its physical kiosk network with transactional digital rentals, ad-supported video and free live TV, third-party subscription channels, original or exclusive entertainment, and a large loyalty programme. Its 40,000 kiosks operate through more than 150 retail partners, while the digital offering broadens the customer relationship beyond disc rental.

Legacy revenue includes roughly $2-per-night DVD and Blu-ray rentals, sales of previously rented discs, kiosk servicing, and entertainment licensing. Digital revenue comes from TVOD purchases, AVOD and free-live-TV advertising, subscription-channel revenue shares, and media sales; multi-product customers can generate up to five times the physical-only ARPU.

The company reported 40 million customers, 39 million loyalty members, more than six billion lifetime rentals, and 13 million-plus TVOD transactions. A SPAC model should combine physical rental decline, digital growth, content costs, media inventory, transaction proceeds, debt, ownership, and cash runway.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- Physical kiosk rental: ~$2/night new-release DVDs and Blu-rays from 40,000 kiosks at 150+ retail partners (Walmart, Walgreens, Dollar General, etc.).
- Digital - TVOD (Redbox On Demand): transactional rental/purchase of digital movies. Launched Dec 2017.
- Digital - AVOD / Free Live TV: ad-supported free on-demand movies/TV (1K+ titles) + 95 free live TV channels. Launched Q4 2020 / Q2 2020 respectively.
- Digital - SVOD Channels: reselling 3rd-party subscription channels (Showtime pilot: 62K bundles purchased). In development for HBO Max, Starz, Discovery+, Paramount+.
- Redbox Entertainment: exclusive/original content - 16 titles released, 24 committed, 36+ targeted per year.
- Loyalty (Redbox Perks): 39MM members, 13MM active, 85% marketable, drives >50% of total rents.
- Key value props: lowest price ($2 or less per night, 3x cheaper than digital rental); availability 80-120 days before Netflix; broad retail footprint.

## Market

- AVOD + SVOD combined TAM: $44 billion by 2022
- SVOD market: ~$26 billion by 2021
- AVOD market: ~$18 billion by 2021
- Source for both: SNL Kagan, November 2020
- Cord-cutting trend: MVPD + vMVPD household penetration declining; online-only/OTA growing (chart from SNL Kagan April 2020).
- Redbox's SAM/SOM: Not explicitly defined in deck.
- Physical rental market: acknowledged as in secular decline.

## Revenue model

Two segments, clearly labeled:

**Legacy Revenue** (physical rentals, sales of previously rented movies, Redbox Entertainment, kiosk servicing):
- Per-night DVD/Blu-ray rental at ~$2 or less.
- Sales of previously rented movies (PRM).
- Kiosk servicing (operating kiosks for other brands).
- Redbox Entertainment original/exclusive content licensing revenue.

**Digital Revenue** (TVOD, AVOD, FLTV, SVOD channels, media sales):
- TVOD: transactional rental/purchase fees.
- AVOD/FLTV: advertising revenue on ad-supported content.
- SVOD Channels: revenue share from 3rd-party subscription sales.
- Media/advertising sales to brands leveraging Redbox's 400MM+ weekly retail impressions.

Multi-product customers generate up to 5x higher ARPU; stacked ARPU: Physical-only ~$22; Physical + PRM ~$58 ($22+$36 implied); Physical + PRM + On Demand ~$103 ($72+$17+$14 implied).

## Traction & metrics

- 18+ years in entertainment; >6 billion discs rented lifetime; 40MM total customers; 39MM loyalty members; 40K kiosks; 150+ retail partners.
- 46MM+ email subscribers; 43MM+ app downloads; 6MM SMS subscribers; 7MM+ social media reach; 400MM+ estimated weekly retail impressions; 600MM+ monthly media impressions.
- TVOD (On Demand): 13MM+ lifetime transactions; 3MM total customers; 74% CAGR (2018-2020); ~$3 CPA.
- TVOD annual revenue: ~$5MM (2018A), ~$16MM (2019A), ~$35MM (2020A) - read from chart.
- AVOD/FLTV: 8MM+ unique devices (last 12 months); 1MM+ MAU; 735% annual growth in ad-supported hours YoY as of Mar'21; 19% compound monthly growth rate (Apr'20-Mar'21); 95 channels; 1K+ AVOD titles.
- SVOD pilot (Showtime): 62K bundles purchased.
- Redbox Entertainment: 16 titles released to date; 24 more committed.
- Digital growth in 2020: 2.25x
- Quarterly theatrical title count: 2019 had 140 titles; 2018 had 160 titles; 2020 was >50% lower due to COVID.

## Unit economics

- TVOD CPA: ~$3 (based on Jan 2019–Dec 2020 total marketing/promotion spend).
- Multi-product ARPU breakdown (2019 data): Physical-only ~$22 ARPU; Physical + PRM ~$58; Physical + PRM + On Demand implies ~$103 total (visual reading: ~$72 + ~$17 + ~$14 stacked).
- Multi-product churn reduction: >11pp reduction vs. physical-only.
- Gross profit margins: 60.1% (2019A), 59.5% (2020A), 59.5% (2021E), 56.0% (2022E), 50.9% (2023E) - note declining as digital mix grows at lower initial margins.
- Adj. EBITDA margins: 23.6% (2019A), 20.8% (2020A), 17.7% (2021E), 21.3% (2022E), 21.3% (2023E).
- FCF conversion (FCF/Adj. EBITDA): 83.2% (2019A), 81.5% (2020A), 82.5% (2021E), 89.8% (2022E), 93.8% (2023E).
- Capex: $33MM (2019A), $21MM (2020A), $18MM (2021E), $20MM (2022E), $15MM (2023E).

## Competition / moat

- Legacy peers: Disney, Comcast, AT&T, Verizon, Charter, Discovery, Lionsgate, ViacomCBS - established but losing share; mature/limited revenue growth; generate FCF.
- Digital peers: Netflix, Roku, Spotify, fuboTV, Curiosity, Chicken Soup for the Soul Entertainment.
- Competitive moat claims:
  - Largest kiosk footprint (40K) - barrier to replication
  - Cheapest new-release price ($2 vs. $6+ digital rental)
  - Movies available 80-120 days before Netflix
  - 40MM customer database with deep behavioral data
  - 39MM loyalty members (~$3 CPA for digital cross-sell)
  - Physical customer base is underserved, "late adopters" (70%) not well-served by streaming-only platforms
- Valuation context: Redbox priced at 3.6x 2022E Adj. EBITDA vs. legacy peer median of 9.3x and digital peer median of 30.3x.

## Team & funding ask / use of funds

**Management team:**
- Galen Smith - CEO (Morgan Stanley, Outerwall)
- Kavita Suthar - CFO (Grant Thornton, Outerwall, US Cellular)
- Mike Chamberlain - COO (Coinstar, PACCAR)
- Mike Feldner - CMO (Walgreens)
- Stephen Lavin - CTO (Outerwall, RedSky, Abbott)
- Jason Kwong - Chief Strategy & Digital Officer (Netflix, Warner Bros.)
- Lori Flynn - Content (Blockbuster)
- Sam Banayan - General Counsel (Outerwall)

**SPAC sponsor (Seaport):**
- Stephen Smith - Chairman
- Jay Burnham - Director (Jefferies, Merrill Lynch, Armory Funds, Cypress Management, Rocker Management)

**Transaction structure / sources & uses:**
- Total sources/uses: $593MM
  - Existing Redbox shareholders equity rollover: $328MM (55.3%) - Apollo Global Management retains ~59% ownership post-close
  - SPAC cash in trust: $145MM (24.5%)
  - PIPE proceeds: $50MM (8.4%) - led by Ophir Asset Management; strategic investors include Lionsgate and Legendary Entertainment
  - Sponsor promote: $36MM (6.1%)
  - Cash at closing: $34MM (5.7%)
- Uses:
  - Equity rollover: $328MM
  - Sponsor promote: $36MM
  - Cash to balance sheet: $109MM
  - Debt paydown: $100MM
  - Transaction costs: $20MM
- Pro forma enterprise value: $693MM ($557MM equity value at $10/share, 55.7MM pro forma shares)
- 16.8MM warrants outstanding at $11.50 strike (excluded from base share count)
- Pre-transaction debt: $344MM; post-transaction debt: $244MM; post-transaction net debt: $135MM
- Leverage: pre-transaction 2.7x net debt/2020A Adj. EBITDA → post-transaction 0.7x net debt/2022E Adj. EBITDA
- Use of proceeds: $100MM debt paydown; remainder funds digital expansion, content acquisition, marketing

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## Recommended financial model

- **Archetype + why:** SPAC / de-SPAC deal model. This is not an operating startup raise - it is a SPAC business combination (Redbox + Seaport Global Acquisition Corp., SGAM). The primary deliverable is a de-SPAC transaction model: sources & uses, pro forma cap table, pro forma ownership, EV bridge, leverage analysis, and warrant dilution. Layered on top should be a simplified operating forecast to stress-test the projected financials that underpin the deal valuation.

- **Forecast horizon & granularity:**
  - Deal mechanics: single-point transaction close (Q3 2021 assumed)
  - Operating projections: annual, 2019A–2023E (matches deck; 5-year range already provided)
  - If building forward, extend to 2025E to capture digital segment reaching scale

- **Key drivers & assumptions:**

  *Transaction / Cap Table:*
  - SPAC trust cash: $145MM
  - PIPE: $50MM
  - Existing shareholder rollover equity: $328MM
  - Sponsor promote: $36MM (3.6MM founder shares)
  - Public warrants: 16.8MM at $11.50 strike
  - Debt paydown at close: $100MM
  - Transaction costs: $20MM
  - Redemption assumption: 0% (base case is no redemptions); need to model redemption sensitivity
  - Share price: $10.00 illustrative
  - Pro forma shares: 55.7MM (excl. warrants)

  *Operating model drivers:*
  - Legacy revenue: $809MM (2019A) → $506MM (2020A, COVID) → $498MM (2021E) → $712MM (2022E) → $728MM (2023E); '20-'23 CAGR: 12.8%
  - Digital revenue: $20MM (2019A) → $40MM (2020A) → $70MM (2021E) → $193MM (2022E) → $384MM (2023E); '20-'23 CAGR: 113%
  - Total revenue: $829MM (2019A) → $546MM (2020A) → $569MM (2021E) → $906MM (2022E) → $1,112MM (2023E)
  - Gross margin: ~60% declining to ~51% by 2023 as digital grows - digital at lower initial margin due to content costs; improving with scale
  - Total operating costs (excl. D&A and one-time): $323MM (2019A) → $251MM (2020A) → $254MM (2021E) → $321MM (2022E) → $332MM (2023E)
  - One-time/non-recurring addbacks: declining from $39MM (2020A) to $2MM (2023E)
  - Adj. EBITDA: $196MM (2019A) → $114MM (2020A) → $101MM (2021E) → $193MM (2022E) → $237MM (2023E); '20-'23 CAGR: 27.6%
  - Adj. EBITDA margin: ~21% normalized
  - D&A: depreciation $67MM (2019A), declining; amortization of goodwill/intangibles $93MM (2019A-2022E), $68MM (2023E)
  - Interest expense: $42MM (2019A) → $33MM (2020A) → $34MM (2021E) → $16MM (2022E) → $5MM (2023E); declining post debt paydown
  - Tax: net benefit in 2019A ($7MM) and 2020A ($26MM) loss years; $5MM (2021E), $27MM (2022E), $40MM (2023E)
  - Net income: ($26MM) 2019A → ($90MM) 2020A → ($113MM) 2021E → $26MM 2022E → $109MM 2023E
  - Capex: $33MM → $21MM → $18MM → $20MM → $15MM; declining reflects kiosk fleet maturity, no major new capex cycle
  - FCF = Adj. EBITDA less capex; conversion 82–94%
  - Post-transaction debt: $244MM; interest rate ~6-8% on remaining debt (pre-transaction rate implied from $33MM interest on $344MM debt ≈ ~10%; rate likely improves post-de-SPAC)

  *Digital segment build (not broken out by line in deck - assumed splits):*
  - TVOD: ~$35MM (2020A) → dominant digital line near-term; growth moderating as AVOD/SVOD scale
  - AVOD/FLTV: early stage, high growth (735% YoY ad-hour growth); small $ near-term, significant by 2023
  - SVOD channels: pilot stage (62K Showtime bundles), meaningful scale by 2023 if agreements secured
  - Digital segment sub-line not disclosed in deck; single combined digital revenue line provided

- **Scenarios (Base / Bull / Bear - which variables flex):**
  - SPAC-specific: redemption rate (0% / 50% / 100%) drives trust cash and pro forma cash/leverage
  - Operating:
    - *Base:* deck projections as filed
    - *Bull:* digital revenue accelerates faster (SVOD launches on-schedule, AVOD ad rates improve); legacy holds at $712-728 level
    - *Bear:* theatrical content recovery slower than expected (as COVID-impacted 2020-21 showed), digital adoption below 113% CAGR, legacy decline steeper; redemptions high reducing cash for digital buildout
  - Key flex variables: theatrical title count recovery, digital ARPU, SVOD channel launch timing, redemption rate, legacy revenue decay rate

- **Required sheets / outputs:**
  1. **Sources & Uses** - SPAC trust, PIPE, rollover equity, sponsor promote, debt paydown, transaction costs, cash to balance sheet
  2. **Pro Forma Cap Table** - shares by class (existing shareholders, SPAC public, sponsor founder shares, PIPE investors), warrant schedule (16.8MM at $11.50), fully diluted share count
  3. **EV Bridge** - equity value → enterprise value (debt + cash + warrants if in-the-money)
  4. **Leverage Analysis** - pre/post net debt, net debt / Adj. EBITDA, interest coverage
  5. **Operating Forecast (2019A–2023E)** - revenue (legacy vs. digital), gross profit, operating costs, adj. EBITDA, net income (GAAP bridge), capex, FCF
  6. **Non-GAAP Reconciliation** - net income → Adj. EBITDA (D&A, amortization, interest, tax, one-time addbacks)
  7. **Valuation Benchmarking** - EV/Revenue and EV/Adj. EBITDA vs. legacy and digital peer sets
  8. **Redemption Sensitivity** - pro forma cash, leverage, shares at 0% / 25% / 50% / 75% / 100% redemption

## Frequently asked questions

### Is the Redbox SPAC financial model free?

Yes. The Redbox SPAC model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.